"Windows is starting up" but it never does...

My computer is Windows XP. Whenever I start it stops on the blue screen that says "Windows is starting up". I've waited hours for it start but it never did.

I tried Safe Mode and the same thing happened. I tried a Recovery CD, but my CD drive is not recognizing it.

The only thing I can access is the Recovery Console. I can also access my computer's entire C: from my other computer on the network with the exception of "My Documents".

Before this I created a recovery folder on my other computer with AVG Free. It contains the files

AVG7DOS.lng
AVg.exe
avi7.000
avi7.001
avi7.002
avi7.003
datadir
incavi.000
incavi.001
incavi.002
index.
miniavi. avg
SYSTAB.rst

Is there anything I can do fix my computer short of reinstalling (my computer came with XP preinstalled) ?

Thanks